OSISKO GOLD ROYALTIES TO ACQUIRE BARKERVILLE GOLD MINES
Osisko Gold Royalties Ltd. has entered into a definitive agreement with Barkerville Gold Mines Ltd., (BGM.V) pursuant to which Osisko has agreed to acquire all of the issued and outstanding common shares of Barkerville that it does not currently own, by way of a plan of arrangement under the Business Corporations Act (British Columbia). Concurrent to the arrangement, Osisko also announces the formation of the North Spirit Discovery group, the next step in the evolution of Osisko's accelerator business that Osisko pioneered over the last five years, with the goal of privatizing and surfacing value in resource development projects.
Under the terms of the arrangement, each shareholder of Barkerville (excluding Osisko) will receive 0.0357 of a common share of Osisko for each share of Barkerville held. The exchange ratio implies consideration of 58 cents per Barkerville share, based on the closing price of Osisko shares on the Toronto Stock Exchange on Sept. 20, 2019, representing a 44-per-cent premium based on both companies' trailing 20-day volume-weighted average price (VWAP) as at Sept. 20, 2019. The exchange ratio implies a total equity value of approximately $338-million on a fully diluted in-the-money basis, inclusive of Barkerville shares held by Osisko.
Upon completion of the transaction, current Osisko and Barkerville shareholders will hold approximately 91 per cent and 9 per cent of Osisko shares outstanding, respectively.
Sean Roosen, chair of the board and chief executive officer of Osisko, stated: "The addition of the Cariboo gold project to our portfolio adds a potentially world-class asset in Canada in an impacted brownfield site with significant infrastructure in place. Osisko and Barkerville will take advantage of their combined mine building, exploration, permitting, development and construction expertise to advance the Cariboo gold project. Osisko expects to fund planned work through available liquidity, future revenue from royalties and streams, project debt as well as outside private equity and joint venture capital through the creation of the North Spirit Discovery group."
In 2018, Osisko generated $82.2-million in operating cash flow at 89.5-per-cent cash margin and $46.1-million at 89.5-per-cent cash margin in the first six months of 2019. Osisko currently has over $800-million in financial capacity, including a $500-million available revolving credit facility.
Benefits to Barkerville shareholders:
- Immediate and significant premium of 44 per cent based on both companies' 20-day VWAPs;
- Continued exposure to the Cariboo project in a broader, more diversified company;
- Acceleration and enhancement of development of the Cariboo project by leveraging Osisko's proven technical team;
- Certainty of financing through Osisko's strong balance sheet and access to capital to advance the Cariboo project on schedule;
- Direct exposure to a high gold price environment through Osisko's strong and growing cash flows;
- Osisko shares offer substantially greater trading liquidity and an attractive dividend.